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Cable and Clegg turn up heat on housing finance debate

Business secretary Vince Cable has called in housing industry leaders today to discuss how to use the sector as an engine to revive the economy.

Dr Cable is understood to have raised the ideas he floated in an interview with Construction News but not to have put any specific proposition to the industry.

Among those present at the top-level meeting are understood to have been housing minister Grant Shapps, Persimmon chief executive Mike Farley and Home Builders’ Federation’s executive chairman Stewart Baseley. Chief construction adviser Paul Morrell was also present along with senior figures from major housing associations.

A spokesman for the business secretary said: “The department recognises the importance of housing to the UK economy and so Vince Cable wanted to talk to the industry. It was a general discussion.”

Meanwhile, deputy prime minister Nick Clegg has told a conference of Liberal Democrat councillors to expect an imminent announcement on government support for housing associations to start building on sites where they have planning permission but lack finance.

This is understood to concern government backing for bonds issued by associations, an idea that has divided housing finance experts.

Dr Cable last week told a meeting of the Liberal Democrat-aligned think tank Centre Forum that housing could “progress rapidly”, adding there is “large unmet demand for social housing which may be self-financing if built, in conjunction with private housing”.

“Indeed, some major UK contractors are doing just that with access to long term – 10 years plus finance – with access to guarantees.  This activity could be multiplied,” he said.

Steve Partridge, director of financial policy and development at the Chartered Institute of Housing, said: “Vince Cable’s speech talked about bond finance, and bonds could have the government as a guarantor, but to get more building there is no magic bullet out there that no-one has thought of before.”

Howard Webb, director of Sector Group’s housing consultancy, said: “I am slightly puzzled by all this as housing associations do not need government guarantees to raise finance.

“They have been very successful at raising more than £3bn from the capital markets at attractive interest rates. What they would like is more [Government] grant, that would encourage them to build more.”

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